British Retailer Grabs PriceGrabber.com $485 million

December 20, 2005 0

Financial Services Group GUS Buys US Online Shopping Comparison Site PriceGrabber.com for $485M

Retail conglomerate GUS has snapped up PriceGrabber.com, an online price comparison service for American shoppers, for $485 million (£273 million), as it moves to capitalize on the success of its financial services arm Experian.


GUS purchased PriceGrabber, which provides information on thousands of goods ranging from computers to clothing, via its Experian credit checking business.

Don Robert, the chief executive of Experian, said: As a trusted and preferred comparison shopping destination, PriceGrabber.com has a leading position in a fast-growing market. When combined with the complementary skills, expertise and scale of Experian, in both interactive and marketing, we are very excited about the future growth prospects for PriceGrabber.com.

Its biggest deal on behalf of its Experian financial services arm bolsters the division ahead of its expected separation from Argos Retail Group in 2006. Analysts said the acquisition would boost GUS’s earnings next year. GUS, which has been working on its own break-up plans for the past 18 months, has spent more than $1bn on expanding Experian this year. Its shares rallied 8.5p to 992p.

PriceGrabber is the latest shopping comparison site to be snapped up by a much larger company looking for a foothold in the steadily growing field. In deals completed during the summer, Cincinnati-based newspaper publisher E.W. Scripps Co. bought Shopzilla for $570 million and online auctioneer eBay Inc. paid $685 million for Shopping.com.

The group believes PriceGrabber will complement Experian’s ability to connect consumers with companies over the internet.

Based in California and with a staff of 140, PriceGrabber provides a price comparison service for shoppers that covers millions of products across 20 categories from consumer electronics and photography to home and garden items and clothing. Retailers pay a fee every time a customer is directed to their Web site via PriceGrabber.

PriceGrabber attracted 17 million unique U.S. visitors during November, ranking it seventh among online comparison sites, according to Nielsen/NetRatings. The top two comparison sites, Shopping.com and Shopzilla, drew about 20 million unique visitors, Nielsen/NetRatings said.

Analysts said the deal was a positive move to boost Experian’s growing interactive offerings.

GUS added that Culver City, Calif.-based PriceGrabber–one of a handful of shopping comparison sites in the United States among Yahoo Inc.’s shopping channel, Shopzilla, Shopping.com, Google Inc.’s Froogle.com, NexTag and ShopLocal — has strong growth opportunities.

About 49.3 million people visited comparison sites during September, an 8 percent increase from 45.8 million at the same time last year, according to Nielsen/NetRatings, a research firm.

Experian has made several successful acquisitions over the years, each time in areas adjacent to its core activities, it added. It has a good track record of exploiting synergies and there is a high likelihood it will do the same with PriceGrabber.

Investec Stockbrockers said the price looked high, but "sales growth means the earnings should grow into the price even before much in the way of synergies."

As it unveiled the deal, GUS said PriceGrabber had 17 million unique users last month and is on course to generate pre-tax profits this year of $25 million on sales of $60 million. The price being paid by GUS represents 19.4 times the website’s forecast pre-tax earnings for the year.

GUS said it hoped that by combining PriceGrabber with Experian, it would also encourage customers to visit other of its websites, which include ClassesUSA.com and LowerMyBills.com.

The group said it reckoned the market for comparison shopping services in the US was worth about $400 million last year and is on course to grow by 40 per cent a year over the next five years.

Investors appeared to welcome the deal, sending GUS’s London-listed shares 11p higher to 994.5p in early morning trades.

The acquisition marks the latest deal by a traditional "offline" retailer, moving to capitalize on the growth of interest in the internet and the potential to cross-sell products to customers.